donor George Roberts formed the San Francisco- based Roberts Enterprise
Development Fund (REDF) in 1997, it was one of the first
organizations to operate under a venture philanthropy
model, which applies business practices to the funding
of nonprofits. (
See Characteristics of Venture Philanthropy.
Unlike most organizations, however, REDF has created an
organizational culture that is committed to reflecting
on and learning from its mistakes, as well as its successes,
and to sharing those learnings with others.
REDF supports ten nonprofit
umbrella organizations that together operate more than
twenty social purpose enterprises. A social purpose enterprise
is a revenue-generating business founded by a nonprofit
to create jobs or training opportunities for very low-income
individuals. More than 600 people-most of whom are low-income
and homeless-are employed by REDF-funded organizations
generating more than $20 million in sales. About half
the businesses are currently profitable and contributing
income to support their parent organization. REDF has
documented improvements in individuals' lives in such
areas as housing, employment, wages, self-esteem, drug
usage, and recidivism.
In this interview, Melinda
Tuan, managing director, discusses drawbacks of the venture
philanthropy model, as well as the self-reflective nature
Do you have any cautions
about the venture philanthropy model for others who may
want to use it?
Be attentive to the power
imbalance. When you have money and you're talking to someone
who wants it, there is always a power imbalance, even
in personal giving. For example, if I suggest to someone
in one of our enterprises that he talk to a particular
person, he might interpret it as, "I have to talk
to this person and hire her," but that might not
have been my intention. At first we felt uncomfortable
with the imbalance of power, so we didn't talk about it.
But we've found it's better to acknowledge it, talk about
it, and be conscious of it on an ongoing basis.
I would also say to be
as clear as possible about everything and communicate
more than you possibly think is necessary. As funders,
we have monthly meetings with the management teams of
our ten investee organizations. Sometimes during that
meeting, I wonder whether they took what I said the wrong
way. So later, I'll call them up and ask if they thought
I was too directive. They'll say, "Yes. I didn't
want to mention it." We still make mistakes. We hope
they're new ones, not the same ones over and over.
It's important to remember
that this work takes a long time and a lot of patience.
And you have to be very comfortable with risk. Some projects
will fail rather spectacularly. Being able to take blame
along with success is the mark of a really good philanthropist.
Much of your success seems
based on the amount of evaluation you do of your own effectiveness
as a funder. How did you become such a self-reflective
From the outset, our founding
executive director, Jed Emerson, had a commitment to being
self-reflective. He invited people to give him and the
rest of us feedback about ourselves, through external
consultants. It was very painful. The personal feedback
was not published, but it provided us with a lot of insight
into how we are received.
REDF was launched in 1997.
In 1998, our investee group gave us feedback that caused
us to look at ourselves and say, "This isn't working."
We then hired an independent consultant to talk with each
of our investee organizations about what was and wasn't
working with REDF's approach to the work. It was a big
turning point for us in that our investees felt listened
to. They found they could speak up to us and we would
What kinds of mechanisms
do you use to create trust and self-reflection?
We publish and share information
about what we've done wrong. That's a real trust builder.
That has a lot to do with our donor. He actually says,
"I want to hear what's going wrong." Having
the freedom to say what hasn't worked increases the reflection
We do the same with the
groups we fund. However, just saying, "I want to
hear what's going wrong" isn't enough. It opens the
door slightly, but it also brings a lot of skepticism.
More important is how you respond if your investees tell
you bad news. If you won't give them any more money, or
you respond by blaming individuals instead of taking responsibility,
it doesn't work. You need to be able to say, "I screwed
up." It's only over time that you're able to prove
to others in a power imbalance that you can be trusted
and you're true to your word. We've worked with some investees
up to ten years and sometimes they're still not fully
open, because of the power dynamic. But they tell us far
more than they tell other funders. A lot of them comment
on that in our interviews.
We also make time to reflect.
A lot of venture philanthropists have started out with
PR about what they're going to do. They talk about what
they're going to deliver and how quickly they're going
to deliver it, so they don't have as much time for reflection.
Our donor has given us freedom by saying from the beginning,
"Let's not talk to the press and the general public
until we have something significant to say. Our work should
speak for itself." This approach has given us the
flexibility to adapt and change, based on what our work
has taught us. Although we have always published what
we've learned from our mistakes, this is the first time
we're talking about our positive results.
--Interviewed by Pamela
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